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S&P cuts ResCap, GMAC
Standard & Poor's said it lowered ratings on Residential Capital LLC to B/C from BB+/B and on GMAC LLC was downgraded to B+/C from BB+/B.
The outlook is negative.
ResCap's downgrades reflect continuing challenges in returning to profitability, a difficult funding environment and possibly reduced parental support from General Motors Corp. (49% ownership in GMAC, which in turn owns 100% of ResCap) and Cerberus Capital Management LP (51% ownership in GMAC).
Wholesale funding markets have become increasingly less reliable and more expensive, S&P added, further pressuring profitability.
GMAC downgrades are driven by the diminished value of its ownership stake in ResCap, but also by a challenging funding environment and expectations for a weaker operating environment in auto lending, the agency said.
In addition, GMAC relies heavily on the structured and whole loan markets for funding, S&P said.
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